Sierra Leone Telegraph: 2 August 2018:
The IMF Executive Board has conducted its First Review Under the Extended Credit Facility (ECF) agreed with the Guinean authorities.
The completion of its assessment of the country’s economic performance, on June 25th, 2018, has enabled the immediate disbursement of SDR 17.213 million (about US$24.3 million), bringing the total disbursements under the current ECF arrangement to SDR 34.423 million (about US$48.6 million).
The Board also approved the authorities’ request for modification and waivers of non-observance of performance criteria.
Guinea’s three-year ECF arrangement was approved by the Executive Board of the IMF on December 11, 2017, for SDR 120.488 million (about US$170.1 million) at the time of the arrangement’s approval, which is equivalent to 56.25 percent of Guinea’s quota.
The ECF arrangement aims at strengthening the country’s economic resilience, scaling-up public investment in infrastructure, while preserving stability, strengthening social safety nets, and promoting private sector development.
Following the Executive Board’s discussion with the Guinean authorities, Mr. Mitsuhiro Furusawa – the Acting Chair and Deputy Managing Director, issued the following statement:
“Guinea continues to demonstrate strong growth momentum and the medium-term outlook is favourable.
“Owing to fiscal slippages, performance under the ECF-supported arrangement against end-December targets was mixed, while program-supported reforms advanced. The authorities implemented corrective measures and program performance strengthened.
“Strong commitment to implementation of program measures is critical to ensure program success and macroeconomic stability.
“Achieving stronger fiscal targets is necessary to preserve debt sustainability, maintain moderate inflation, and support bank’s credit to the economy.
“To this end, the authorities aim at mobilizing additional revenues, capturing mining revenues, containing non-priority spending and reducing untargeted energy subsidies, while scaling-up growth, supporting public investment and strengthening social safety nets.
“Maximizing reliance on concessional borrowing while limiting non-concessional borrowing for infrastructure development will help preserve debt sustainability.
“Strengthening public finance and investment management is important to foster transparency and efficiency.
“Building external buffers is important to strengthen Guinea’s resilience to shocks. To this end, the authorities will adopt an active strategy for accumulating foreign exchange reserves.
“Strengthening competition in the foreign exchange market; and moving to a rule-based central bank’s intervention strategy will support greater exchange rate flexibility.
“Monetary policy should gear towards preserving moderate inflation. Furthermore, limiting government budgetary borrowing from the central bank will help contain inflationary pressures.
“A more active liquidity management will enhance the monetary policy framework and support banks’ provision of credit to the private sector. Advancing reforms to maintain financial stability will strengthen macroeconomic resilience and support growth.
“Pressing ahead with structural reforms is pivotal to foster private sector development and broad-based growth. Thus, implementing the action plan to improve the business climate, strengthening governance and fostering financial inclusion is key.”